Job creation volatile, mostly of poor quality work

by IBON Media

Research group IBON said that the recently reported job generation is mostly in poor quality work and confirms volatile labor market conditions rather than a strengthening economy.

The group made the statement after the recent release of seemingly favorable employment figures and warned against complacency.

The Philippine Statistics Authority (PSA) reported an increase in the number of employed by 2.3 million and an increase in the number of unemployed by 103,000 in July 2019 from the previous year.

The employment and unemployment rates stayed the same as last year at 94.6% and 5.4%, respectively.

IBON however said that the extreme volatility in the labor market since 2016, for instance, should temper overenthusiasm that the economy and the labor force situation is improving.

Millions of Filipinos are making do with poor quality work and hundreds of thousands more are in and out of work.

The group recalled that the reported 2.3 million additional employment in 2016 reversed to 664,000 net job losses in 2017.

In 2018, 2.4 million new jobs were reported generated in the January labor force survey round, measured year on year, but this reversed to 218,000 net job losses in the October round.

The situation remains as volatile so far this year, ranging from 387,000 net job losses in January 2019 to the recently reported 2.3 million job creation in July 2019.

This volatility indicates Filipinos struggling to find work where they can on a day-to-day basis rather than a strengthening economy creating steady jobs paying decent incomes, IBON stressed.

Looking at employed persons in terms of hours worked, 2.2 million or an overwhelming part of the net 2.3 million additional employed in July 2019 was actually just in part-time work of less than 40 hours.

This caused the share of part-time work in employment to markedly rise from 28.2% to 31.8 percent.

Looking at employed persons by class of worker, IBON pointed out that the biggest employment increases were actually in low-earning, insecure, and informal work, as well as in unpaid family work.

The number of self-employed without paid employees grew by 1.1 million and the number of unpaid family workers grew by 854,000.

Finally, IBON said that looking at the three biggest job-creating sectors also does not give confidence.

The sectors creating the most jobs included wholesale and retail trade which grew by 820,000, and accommodation and food service by 292,000.

These subsectors are notorious for high informality and uncertainty, the group said.

IBON noted the 716,000 increase in agricultural employment but pointed out that this is likely only momentary because agricultural employment is in long-term decline especially from lack of government support for the sector.

IBON also commented on the underemployment rate falling significantly from 17.2% in July 2018 to 13.9% in July 2019.

This is equivalent to the 7 million underemployed last year falling to just 6 million this year.

The group said that while falling underemployment is commonly used as a proxy for improving quality of work, the latter is not necessarily what is happening.

Underemployment refers to employed persons wanting additional hours of work in their present job, an additional job, or a new job with longer working hours.

IBON explained that the large drop in the underemployed is possibly only because workers are already working such long hours that they do not want additional hours in their present job, cannot take on an additional job, or cannot imagine a new job with even longer hours.

The breakdown of reported underemployed persons is not inconsistent with this, the group said.

The number of those working 40 hours and over in a week, or the invisibly underemployed, fell by a huge 1.5 million from 3.7 million in July 2018 to 2.2 million in July 2019.

Those who worked less than 40 hours, or the, visibly underemployed, meanwhile, increased by 352,000, hence the net decrease of some 1.1 million total underemployed.

IBON said that while more employment is always desirable, government should ensure that jobs are decent and sustainable.

But as long as government neglects the development of domestic agriculture and industries to generate stable and quality work, the jobs crisis will continue to worsen, and Filipinos will keep grappling with poor job prospects. #

Scrap provincial bus ban, find pro-people solution to traffic–IBON

Government should find another way of decongesting Metro Manila’s major thoroughfare instead of aggravating the inconveniences of hundreds of thousands of provincial bus commuters, research group IBON said.

Commuters’ welfare should be the primary consideration of the Duterte administration in addressing transport woes but its approach should be comprehensive and regulation should cover private vehicles as well, said the group.

During a hearing conducted by the Senate Committee on Public Services, IBON supported calls to scrap the Metro Manila Development Authority (MMDA)’s Regulation Number 19-002, which aims to remove all provincial public utility bus (PUB) terminals from the entire length of EDSA in order to ease traffic.

That provincial buses are instead directed to load and unload in integrated terminals in Sta. Rosa, Laguna for PUBs coming from the south, in Paranaque for those with terminals in Pasay City, and in Valenzuela City for those coming from the north, is inconsiderate of hundreds of thousands of commuters who have to take the provincial bus regularly, the group said.

IBON said that the MMDA regulation nitpicks on provincial buses servicing a big number of commuters without addressing the fact that private cars make up most of daily EDSA traffic and pollution.

Based on MMDA and commuter network Move Metro Manila/ Komyut figures, IBON estimates that provincial buses move up to 425,000 commuters, while cars plying EDSA move at least 370,000.

Cars, however, comprise 65% of traffic and also contribute more to pollution and carbon dioxide emissions, noted the group.

Buses, meanwhile, 66% of which are provincial, take up only 3.5 percent.

Metro Manila’s transport system lacking a last-mile system makes relocating provincial bus terminals to limited spots more difficult for provincial bus commuters, IBON added.

Memo 19-002 adds another layer instead of simplifying the transportation process for commuters.

It not only aggravates their plight in combating traffic but even adds cost due to additional rides for example.

IBON said that in other countries, last-mile solutions include publicly available shuttle rides or bicycle infrastructure that ensure seamless mobility from a central hub or terminal to a passenger’s final destination.

IBON said that the bus ban also disregards how many ordinary passengers live in neighboring provinces but work in the National Capital Region (NCR) for lack of job opportunities elsewhere. 

Taking the train is no viable alternative because the country’s rail systems and interlinkage remain quite underdeveloped to say the least, said the group.

The public Philippine National Railways has not been restored to its full potential and only runs from Tondo to Laguna; the other public Light Rail Transit (LRT) systems operate only within Metro Manila.

The private Metro Rail Transit 3, meanwhile, traverses EDSA but only partially, and has a record of multiple breakdowns and mishaps due to inefficient management regardless of fare hikes.

Looming public utility jeep (PUJ) phaseout worsens the scenario and not only for provincial bus commuters, said IBON.

This is because PUJs currently play a proxy role in first mile and last mile functions, or in taking commuters to and from areas near central transport hubs.

IBON said that traffic solutions that are arbitrary and inimical to the public such as the bus ban should be rescinded. Instead, government should forge a pro-people solution to traffic woes that can start with conducting genuine consultations with affected sectors for all mass transport endeavors. 

The group added that congestion due to too many private cars can be checked, such as with a congestion tax, stricter street parking rules, and perhaps even curbing car ownership.

It may also be necessary, IBON said, to conduct an audit of road and rail safety including the accountability of corporations and agencies involved.

As with other public services, privatization and the user-fees policy should be stopped in mass transport, said the group.

In its transport policy study titled “Mass Transport System in Metro Manila and the Quest for Sustainability”, IBON said that government’s direction should be to craft a sustainable mass transport system: It should be efficient – meaning shortest travel time, shortest possible distance, and least changes in transport mode. It should be reliable, where expected travel time is actual travel time, and unnecessary waiting is minimized. It should be accessible – meaning infrastructure is easy to access, and affordable as well as considerate of the specific needs of various sectors. It should be safe to prevent harm and ensure pedestrian-friendly conditions. It must also be environmentally sound using clean and energy-efficient fuels and promoting non-motorized transport such as cycling and walking. #

Duterte’s midterm: change for the worse

(IBON 2019 Midyear Birdtalk Briefing Paper economic situation highlights)

The country’s slowing economy, and worsening jobs crisis and poverty disputes the Duterte administration’s hype of economic gains. IBON said that this is bound to worsen if the Duterte administration continues unopposed on its current neoliberal trajectory wherein the interests of big foreign and local business prevail to the detriment of millions of Filipinos, especially the poor.

Economic growth slowing since the start of the administration.Philippine Statistics Authority (PSA) data show that gross domestic product (GDP) growth has been slowing in the 11 quarters since the start of the Duterte administration from 7.1% in the third quarter of 2016 to 5.6% in the first quarter of 2019. There was a momentary increase to 7.2% in the third quarter of 2017 but growth fell rapidly after this. Notably, growth was slowing even before the budget impasse and election ban on infrastructure spending.

High real unemployment. Computing according to the original definition of unemployment for comparability would show that the real unemployment rate in 2018 is 10.1% and the real number of unemployed is 4.6 million. These are much worse than the already high 9.0% unemployment rate and 4 million unemployed in 2016, again computed according to the original definition. In contrast, officially released figures for 2018 were a grossly underreported 5.3% and 2.3 million, respectively.

The record real unemployment last year is a direct result of how only an annual average of 81,000 new jobs have been created since the start of the Duterte administration, from 41.0 million employed in 2016 increasing by 162,000 to 41.2 million in 2018. To put this into context and even granting that the administration is just at its midpoint, this is so far the worst employment generation post-Marcos.

Lowest and least frequent wage hikes under Duterte. The Duterte administration is so far making the worst record on wage hikes of all post-Marcos administrations. In the NCR, for instance, it has only given an average of one wage hike every 18 months. The frequency of wage hikes previously ranged from one every 16 months under Arroyo to one every 10 months under Ramos. Over the two wage hikes under Duterte, the nominal value of the wage increased by only 9.4% – compared to a range of 11.5% by Benigno Aquino III to 45.9% by Corazon Aquino over their respective first two wage hikes.

Poverty underreported. IBON estimates on Family Income and Expenditure Survey (FIES) data in 2015 found that the poorest 50% or 11.4 million families had monthly incomes of just Php15,000 or less, and the poorest 60% or 13.6 million families just some Php18,000 or less.

Inequality worsening. The net worth of the country’s richest Filipinos and profits of the largest corporations continue to grow, in some cases even outpacing economic growth. The net worth of the 10 richest Filipinos grew from Php2.5 billion in 2016 to Php2.7 billion in 2018. The net worth of the 40 richest Filipinos grew from Php3.7 billion to Php3.8 billion in the same period. The net worth of the 40 richest as percentage of GDP was 21.9% in 2018.

Agriculture in crisis, manufacturing stalling. Agriculture has been left to perform chronically poorly. The sector grew by just 0.8% last year and in the first quarter of 2019. This is just around half the growth pace of 1.5% in the 2010s and not even a third of the 2.9% clip in the 2000s. Employment in agriculture has fallen by 1.1 million between 2016 and 2018, with an initial further 376,000 losses reported in April 2019 from the same period last year.

Manufacturing already appears to be stalling with growth of just 4.9% in 2018 – the slowest since 2012 – and slowing further to 4.6% in the first quarter of 2019. The share of manufacturing in total employment of just 8.8% in 2018 is actually even much lower than its 10.1% share in 1990 and 11% in 1990. These are despite the sector growing by 22.1% between 2016 and 2018, according to national accounts data.

Poorest land distribution. Lands covered by the Comprehensive Agrarian Reform Program (CARP) should have been distributed by 1998. This deadline was reset twice, yet until now 100% distribution has not been met. To add to this injustice, distribution is slow and is even going at a slower pace than before under the Duterte administration. Department of Agrarian Reform (DAR) land distribution accomplishment in the period 2016-June 2019 is just at an average of 2,920 hectares monthly. This is much less than under Benigno Aquino III (8,254 hectares, July 2010-2015), Arroyo (9,047 hectares, January 2001-June 2010), Estrada (11,113 hectares, July 1998-2000), Ramos (26,389 hectares, July 1992-June 1998), and Corazon Aquino (14,142 hectares, July 1987-June 1992).

Build Build Build, for whom?Over the 2016-2017 period, the biggest concentration of gross value in public construction was in Pres. Duterte’s home region of Davao (Region XI) accounting for 14.1% of the total. The increase in Davao is notable in almost doubling from 7.9% over the period 2010-2015 to 14.1% in 2016-2017. Close Duterte allies have reportedly been among the beneficiaries of the surge in Davao construction projects.

Mounting debt. The government is already borrowing heavily. Total outstanding debt of the national government stood at Php7.9 trillion as of May 2019 implying a total increase of Php2 trillion since the start of the Duterte administration. In nominal terms, this is equivalent to an average monthly increase in debt of Php56.2 billion, which is over two-and-a-half times that of the Arroyo administration (Php21.2 billion) and nearly three times that of the previous Aquino administration (Php19 billion).

Truth about TRAIN. The Duterte administration has tried to divert from the regressive nature of its tax reforms by repeatedly claiming that it benefits “99% of taxpayers” and giving the impression that 99% of Filipinos gain from TRAIN Package One. The reality however is that only 5.5 million personal income taxpayers coming largely from the highest income groups will gain from TRAIN’s personal income tax cuts. An additional two million taxpayers are minimum wage earners and so previously already exempt. On the other hand, the poorest 17.2 million or eight out of 10 (76%) Filipino families will pay TRAIN’s higher taxes on consumption goods including petroleum products and sugar-sweetened beverages. #

Research group: Davao businessmen may be benefiting from Duterte admin’s infra program

Amid government hype of its Build, Build, Build program, research group IBON noted that there has been a conspicuous increase in public infrastructure spending in the Davao region that seems to have favored Davao-based businessmen.

The group observed that close allies of the president have benefited from the government spending surge by clinching a number of contracts.

IBON cited data from the Philippine Statistics Authority (PSA)  showing that the gross value of public construction in the Davao Region increased by 17.6% from 2016-2017.

The region had the highest increase of gross value in public construction among other regions during the same period.

Among the Davao-based businessmen is the family of former Special Assistant to the President and newly-elected Senator Bong Go who through CLTG builders secured 20 contracts in 2017 for road networks in Davao, said the group. These were worth around Php3 billion in solo projects and joint ventures.

In 2018, CLTG Builders also bagged Php116 million worth of projects in Davao. CLTG builders is owned by Bong Go’s father, Desiderio Go.

Another notable Davao-based businessman is Dennis Uy who, according to the president’s Statement of Contributions and Expenditures, donated around Php30 million to his presidential campaign.

Data from the Public-Private Partnership Center shows that Uy has three unsolicited proposals in Davao that include the Davao International Airport worth Php48.8 billion, Davao People Mover worth Php30 billion, and the Davao Sasa Port Modernization Project worth Php18.7 billion.

Another unsolicited proposal of Uy is the Pasay City Reclamation Project worth Php62 billion.

IBON meanwhile noted that other businessmen may also be gaining from the Build, Build, Build program.

For instance, Department of Public Works and Highways (DPWH) Secretary Mark Villar’s father, Manuel Villar, through Prime Asset Ventures Inc. (PAVI) is eyeing two unsolicited proposals worth Php213.3 billion.

These include the LRT 6 Cavite Line A project worth Php56.3 billion, and the Cavite LRT Line 6c and Sucat Line 6b Projects worth Php157 billion.

IBON reiterated that while the country badly needs infrastructure, genuine development from the Build, Build, Build program can only be achieved if it supports the development of domestic agriculture and Filipino industries.

The Duterte government should not be beholden to its backers and instead pursue an infrastructure program that is not profit-oriented and provides for the Filipino people’s welfare, said the group. #

President’s SONA in denial of slowing growth and fundamental economic crisis

by IBON Media

In his fourth State of the Nation Address (SONA), President Duterte did not admit that the economy is on a slowdown and that the country’s production sectors are deteriorating. Instead, the President harped on deceptive, business-biased policy proposals that at the very least do not address the basic problems of the economy, and at worse, may aggravate economic woes. Government should build policies upon an honest recognition of the country’s real situation.

Slackening economy ignored

Nowhere in the President’s SONA was it mentioned that the country’s economy has been slowing from 7.1% growth of gross domestic product (GDP) in the third quarter of 2016 to 5.6% in the first quarter of 2019. Growth fell rapidly even after a momentary increase to 7.2% in the third quarter of 2017. This slowdown was happening long before the 2019 national budget impasse and the election ban on infrastructure spending and despite record levels of foreign investment reaching US$9.8 billion in 2018.

It would have been important for the President to note this and admit that the slowdown is due to reliance on unsustainable, external sources of growth: Slowing overseas remittances (average growth rate fell from 15.5% annually in 2002-2008 to 3.7% in 2017-2018) and a slowing business process outsourcing (BPO) sector (average growth rate fell from 43% annually in 2005-2009 to only 2.7% in 2017-2018) that impacted on real estate, renting, and business activities. Household spending, export of services (including BPOs), capital formation (including construction), and government spending also slackened.

This points to the urgency of developing sustainable long-term drivers of growth pertaining to more vibrant agriculture, dynamic Filipino industry, and equitable distribution of economic gains. In his SONA, however, the President, though acknowledging the need to boost agriculture and jobs, stuck to the same type of market-oriented measures that perpetrate underdevelopment and backwardness.

Hampering agriculture

Pres. Duterte vowed to continue investing in agriculture programs to increase the income and productivity of small farmers and fisherfolk. In particular, he said that government will ensure the full implementation of the Rice Tariffication Law’s Rice Competitiveness Enhancement Fund (RCEF) to safeguard the livelihood of small farmers.

But the RCEF amount of Php10 billion annually for six years, which government claims will fund farm inputs and operations, is dismally low compared to Vietnam and Thailand agriculture subsidies. Hugely the funds will be used to purchase commercial equipment, seeds, and services for distribution to local government units and certified farmers organizations. RCEF is prone to patronage politics and might marginalize rather than benefit farmers. Peasant groups also fear that the removal of restrictions on rice importation will displace over 2 million rice farmers and imperil the local rice industry with the influx of imported rice.

By sourcing the Philippine staple from a volatile world market and allowing unlimited albeit tariffied rice importation, rice tariffication threatens farmers’ livelihoods and the country’s food security. It does not address the current state of shrinking agriculture. The sector lost over a million jobs from 2016-2018, and barely grew at 0.8% in 2018 and in the first quarter of 2019. Its 8.2% share of GDP in the first quarter of 2019 is its smallest ever share of the economy, yet 2019 budget allocation to agriculture was reduced by Php3.4 billion from an already low Php50.7 billion in 2018 to just Php47.3 billion in 2019.

Instead of pushing rice liberalization, which will benefit rice importers and private traders more than local rice farmers and rice-eating Filipinos, the government should preserve its mandate to procure a minimum of 25% of local produce to sell at a reasonable price that will influence market rice prices to be affordable. There should also be a genuinely distributive and free land reform program to liberate farmers from having to amortize awarded land, and substantial agriculture support and subsidies from domestic industries that will truly aid in raising productivity and incomes instead of burdening the sector with conditional support and mounting debts.

Stifling Filipino industries

The President also did not address a manufacturing sector that appears to be stalling. Manufacturing growth was just 4.9% in 2018 – the slowest since 2012 – and slowed further to 4.6% in the first quarter of 2019. The sector remains shallow and mostly disconnected from the local economy due to being foreign-dominated and capital-intensive in export enclaves. As a result, employment generation has been relatively weak. Manufacturing employment increased by just 221,000 or 6.5% between 2016 and 2018, with even a contraction of 101,000 reported in April 2019, according to official labor force data.

Instead, he praised the Tax Reform for Acceleration and Inclusion (TRAIN) for helping fund government programs, and pressed for the enactment of the Tax Reform for Attracting Higher and Better Opportunities (TRABAHO) to energize micro, small and medium enterprises (MSME’s) and generate more than a million jobs.

But TRABAHO is a misnomer because its focus is not on creating the stable jobs that Filipinos need, but on lowering corporate taxes and rationalizing incentives. It in fact adds to the regressiveness of TRAIN, which relieves the rich of personal, estate and donor taxes, by increasing corporate profits and the wealth, income, and property of the rich. On the other hand, government will make up for the resulting losses in tax revenues through indirect levies which tax consumption – including by mostly low-wage workers and low-income Filipino families – regardless of their lack of wealth, income and property.

The President’s recommending TRABAHO for MSMEs in his speech diverts from MSMEs’ being mostly in the service sector wherein jobs are usually temporary and low-paying: the top five MSME industries are wholesale and retail trade, repair of motor vehicles and motorcycles, accommodation and food service activities, manufacturing, service activities, and financial and insurance activities. The manufacturing sector would potentially be a generator of stable jobs, however contractualization is rampant. The transnational corporations-dominated sector has even seen Filipino workers suffer poor working conditions and stifled labor rights.

Not only do Filipinos need more jobs, the people need quality jobs. But behind the hype of improved employment are signs of a persistent jobs crisis that no corporate-biased policy intends to cure: over 11 million of the combined unemployed and underemployed, and almost 28 million of the employed being in informal, non-regular, or agency-hired work.

(Malacañang photo)

Reorient the economy

Filipino firms must instead be built, sourcing materials from a robust agriculture, and building across consumer, light to heavy industries that will supply the people’s and the nation’s needs. This removes the need to rely on – or be limited to – commercial sources. This will also certainly improve production, stimulate job generation, increase working Filipinos’ incomes, and enliven economic activity both in the rural and urban areas.

All these mean that the government should thwart its business bias so that the country’s economic direction can be refocused to truly prioritize the people’s well-being and national development. This has not been the course of the Duterte administration as evidenced by the neoliberal policies highlighted in his SONA such as rice tariffication and TRABAHO. #

It is offending China, not war, that Pres. Duterte is avoiding – IBON

by IBON Media

Research group IBON said that Pres. Rodrigo Duterte’s stance on the West Philippine Sea (WPS) issue, as expressed in his fourth State of the Nation Address (SONA), is not about avoiding war with China, but is about avoiding offending the Chinese government and losing all its promised funds.

Last July 22, Pres. Duterte highlighted the possibility of China attacking the country if the government took a strong stance on its claims in the disputed WPS.

According to the president, “more and better results can be reached in the privacy of a conference room than in a squabble in public”.

IBON, however, said that the administration is only using the possibility of war to conceal the agreements reached “in the privacy of a conference room” between the Philippine and Chinese governments which seem to be at the expense of the Filipino people’s interests.

IBON noted that while other claimants to the disputed area, like Vietnam and Indonesia, are taking a more aggressive stance to defend their claims, China has yet to declare war against these two countries.

The group said that the administration should see this as an opportunity to foster unity between the Philippines and its other neighbors to defend their respective claims against China.

But the government is not doing this, nor is it asserting the July 2016 ruling of the international tribunal, the Permanent Court of Arbitration, that was in favor of the Philippines.

The decision upheld the country’s  rights over the 200-nautical miles exclusive economic zone (EEZ) under the United Nations Convention on the Law of the Sea (UNCLOS).

The President instead has claimed to be proud of his friendship with China, IBON said.

Rather than defend his fellowmen, he has insulted Filipino fishermen by implying that they should be thankful that Chinese Pres. Xi Jin Ping allowed them to fish in the WPS.

He also reduced the ramming and sinking of the Filipino fishing boat Gem-Ver 1 by a Chinese ship in June to “a mere incident”.

IBON said that the reason for the Duterte administration being overly accommodating is most likely due to its desire for Chinese financing.

IBON estimates that the government is seeking as much as Php673.2 billion from China for its 75 flagship projects aside from Php204.7 billion more for infrastructure and other projects – for a total of Php877.9 billion.

According to the group, the terms of the loan agreements that the administration enters into with China for its infrastructure drive are onerous.

These include only using China’s goods and services, including for payment of Chinese contractors and even hiring of Chinese workers; stringent loan payment schedules; contracts being explicitly governed and construed in accordance with the laws of China and disputes having to be settled in the courts of China; and the Philippines waiving its sovereign rights over its patrimonial assets in connection with any arbitration proceeding.

The last is synonymous with the collateralization of  the country’s assets, like natural and strategic resources.

IBON said that instead of being concerned with stepping on China’s toes and losing financing, the Duterte administration should implement a truly independent foreign policy.

Such a policy should defend and uphold Philippine sovereignty, ensure  domestic development, and prioritize the welfare of all Filipinos, said the group. #

Duterte’s Midterm: Change for the Worse

Research group IBON said that the Duterte administration is being dishonest in its recent pronouncements about high growth, reducing unemployment, and reducing poverty.

The group said that the government is taking liberties with statistics as part of its propaganda campaign that President Duterte is keeping his promise of real change.

In its pre-State of the Nation Address (SONA) forum, the Department of Finance (DOF) hailed the Duterte administration for its achievements during its first three years in terms of “rapid economic expansion”, “the lowest [unemployment] in 40 years”, “alleviating poverty”, and Tax Reform for Acceleration and Inclusion (TRAIN) law “benefiting 99 percent of taxpayers”.

According to IBON executive director Sonny Africa however, growth has actually been slowing since the start of the Duterte administration.

Philippine Statistics Authority (PSA) data show that gross domestic product (GDP) growth has been slowing in the 11 quarters since the start of the Duterte administration from 7.1% in the third quarter of 2016 to 5.6% in the first quarter of 2019. There was a momentary increase to 7.2% in the third quarter of 2017 but growth fell rapidly after this.

IBON also pointed out that the growth was slowing even before the budget impasse and election ban on infrastructure spending.

Africa added that the economic managers are being deceitful in claiming that the 5.1% unemployment rate in April 2019 is the lowest unemployment in four decades.

He pointed out that the DOF is well aware that the change in the official definition of unemployment in 2005 drastically reduced the reported unemployment rate and number of unemployed which makes the April 2019 figure incomparable with the 25 years of data before 2005.

On the contrary, IBON said, computing according to the original definition of unemployment for comparability would show that the real unemployment rate in 2018 is 10.1% and the real number of unemployed is 4.6 million.

These are much worse than the already high 9.0% unemployment rate and 4 million unemployed in 2016, again computed according to the original definition.

In contrast, officially released figures for 2018 were a grossly underreported 5.3% and 2.3 million, respectively.

The high unemployment is a direct result of how only an annual average of 81,000 new jobs have been created since the start of the Duterte administration, from 41 million employed in 2016 to 41.2 million in 2018.

This is the worst job generation in the post-Marcos period.

Poverty statistics meanwhile show seemingly less poor Filipinos only because of government’s very low poverty threshold, said Africa.

The government’s Php69.50 daily per capita poverty threshold and only Php48.60 subsistence or food threshold in the first semester of 2018 are absurdly low and not conceivably enough to meet decent minimum standards for food, shelter, transportation, health care, and education, stressed Africa.

He said that this leads to a gross underestimation of the real number of poor Filipinos.

Finally, Africa clarified that it is very deceitful to claim that TRAIN benefited 99% of taxpayers.

The Duterte administration wants to make it appear that 99% of Filipinos benefited from TRAIN but the truth is that only 5.5 million personal income taxpayers with tax cuts out of 23 million Filipino families gain from TRAIN.

The poorest 17.2 million or eight out of 10 Filipino families will pay TRAIN’s higher consumption taxes but without any personal income tax gains to offset these.

The government is trying to distract the public from how a disproportionate part of TRAIN revenues come from the poorest majority of Filipinos due to additional levies on consumption goods including petroleum products and sugar-sweetened beverages, said Africa.

IBON warned the public to be more discerning about the government claims and not to take these at face value.

Yet the country can only start to take steps to real solutions when there is more candor and honesty, rather than self-serving propaganda, about the real problems the economy and the people face. #

Duterte selling out sovereignty for Chinese funding – IBON

Research group IBON said that the Duterte administration’s downplaying of the hit-and-run by a Chinese vessel of a Philippine fishing boat in the West Philippine Sea (WPS) shows how it gives more importance to Chinese funding over Philippine sovereignty.

On June 9, a Chinese vessel rammed and sank the Filipino fishing boat F/B Gem-Ver and left the 22 fishermen on board adrift at sea.

President Rodrigo Duterte’s first comment on the issue over a week after it happened, on June 17, was to dismiss it as a simple “maritime incident” being played up by “stupid politicians”.  

The president echoed the Chinese foreign ministry’s statement a few days earlier calling the boat sinking “an ordinary maritime traffic accident” and warning against “irresponsibly politicizing” the collision.

IBON explained that the Duterte administration’s position is most likely influenced by how it is courting billions in dollars in aid, debt and investments from China.

The government is reportedly seeking as much as US$14.3 billion in official development assistance (ODA) from China to finance 29 ‘Build, Build, Build’ infrastructure projects costing US$16.8 billion.

China ODA has already increased by 24,200% under the Duterte administration – from US$1.5 million in 2016 to US$364.9 million in 2018, said the group.

China ODA is seen as essential to fund flagship infrastructure projects.

Loan agreements with China have already become controversial for having terms disadvantageous for the Philippines and compromising its sovereignty.

The most expensive infrastructure project to be funded by China is the Philippine National Railway (PNR) South Long Haul Project worth US$3.3 billion.

China is also being targeted to fund the Mindanao Railway Project Phase 1 worth US$677 million.

IBON also noted surging foreign direct investments (FDI) from China.

China FDI increased from US$0.4 million in 2016 to US$163.4 million in 2018.

Moreover, the Duterte administration also managed to get pledges from Chinese companies of around US$12.1 billion during the second Belt and Road Forum for International Cooperation last April 2019.

Prime Minister Xi Jinping also pledged US$148 million in grants to help boost the Philippine economy during the forum.

The Duterte administration is not asserting the country’s sovereignty or upholding the rights of the Filipino fishermen for fear of jeopardizing the China aid and investments it is so eager for, said IBON.

It is desperate to stimulate the Philippine economy amidst its sluggish performance.

Growth of gross domestic product (GDP) fell to 5.6% in the first quarter of 2019 from 6.5% in the same period last year.  

IBON also warned that China has already been implicated in controversial deals gone bad where governments were pressured to give up strategic assets like ports.

China-funded projects around the world have also been hounded by allegations of hundreds of millions of dollars in corruption and overpricing.

IBON said that a truly independent foreign policy includes asserting the country’s sovereignty and upholding domestic economic development including the welfare of all Filipinos.

The Duterte administration should stop privileging China in Philippine territory just because it is promising so much financing, the group said. #

Prices still higher now than since start of Duterte admin

Research group IBON said that while June inflation has slowed, the prices of basic food items are still higher, especially when compared to prices at the start of the Duterte administration. The wages and incomes of many Filipinos are unable to keep up with the high prices.

The group said that food prices will continue to increase as long as government neglects Philippine agriculture and the country becomes further dependent on imports.

The Philippine Statistics Authority (PSA) reported that nationwide inflation slowed to 2.7% in June 2019 from 3.2% the previous month.

Inflation in the National Capital Region (NCR) eased to 3.0% from 3.4%, and inflation in areas outside of NCR fell to 2.6% from 3.1%, during the same period.

IBON executive director Sonny Africa said however that this lower inflation is not being felt by the public.

He said that food is still generally more expensive than in the same time last year, and especially compared to July 2016 at the start of the Duterte administration.

For instance, in Metro Manila, between the first week of July 2018 and the same period in July 2019, rice is slightly cheaper but fish, chicken and many vegetables are much more expensive, Africa said.

According to the PSA, the prevailing retail price of commercial well milled rice in the first week of July 2019 was Php44 per kilogram (/kg), which is only one peso cheaper than the Php45/kg in the first week of July 2018.

The cost of fish like bangus and tilapia meanwhile was much higher, increasing by Php10 and Php20, respectively.

Retail prices for whole chicken, carrots, and potatoes also rose by Php10, Php40, and Php20.

Africa said that NCR food prices are much more expensive now compared to prices during the first week of July 2016, at the start of the Duterte government.

Commercial well milled rice is higher by Php4.00/kg; bangus by Php20; tilapia by Php10; galunggong by Php20; whole chicken by Php20; ampalaya by Php20; carrots by Php30; habitchuelas by Php20; tomato by Php30; potato by Php10; and eggplant by Php20.

But the wages and incomes of ordinary Filipinos are not enough to cope with these higher prices, he said.

IBON estimates that the family living wage (FLW) needed to meet basic needs is PHP1,008 for a family of five and Php1,210 for a family of six in the NCR as of June 2019.

But the NCR nominal minimum wage of Php537 is not enough with wage gaps of Php471 and Php673, respectively.

Africa said that food prices will keep rising and be unnecessarily expensive as long as government continues to neglect the country’s agriculture sector.

He noted that the budget for agriculture continues to shrink, with the Department of Agriculture (DA) budget cut by Php3.4 billion in 2019 and of the National Irrigation Administration (NIA) by about Php5.6 billion.

The country’s increasing dependence on food imports because of policies like the Rice Tariffication Law will only worsen the country’s agriculture crisis, Africa said.

Rice liberalization will not necessarily ensure a cheap and stable supply of rice while harming the livelihoods and incomes of Filipino rice farmers.

Increased rice imports may have been behind the falling farmgate price of palay which significantly dropped from Php21.36/kg last year to Php17.91 this year.

Rather than rely on rice imports, domestic rice production should be made more efficient and productive to make this cheaper, said Africa.

Africa said that lowering food prices through more developed domestic agriculture is essential for lower inflation.

He also said that low inflation will be more meaningful for the public if they have higher incomes to begin with.

The government can give relief to Filipino families struggling with high food prices not just by continuing to provide affordable NFA rice but also by substantially increasing wages and salaries. #

Duterte administration being dishonest about economic ‘gains’

Research group IBON said that the Duterte administration is being dishonest in its recent pronouncements about high growth, reducing unemployment, and reducing poverty. The group said that the government is taking liberties with statistics as part of its propaganda campaign that President Duterte is keeping his promise of real change.

In its pre-State of the Nation Address (SONA) forum, the Department of Finance (DOF) hailed the Duterte administration for its achievements during its first three years in terms of “rapid economic expansion”, “the lowest [unemployment] in 40 years”, “alleviating poverty”, and Tax Reform for Acceleration and Inclusion (TRAIN) law “benefiting 99 percent of taxpayers”.

According to IBON executive director Sonny Africa however, growth has actually been slowing since the start of the Duterte administration. Philippine Statistics Authority (PSA) data show that gross domestic product (GDP) growth has been slowing in the 11 quarters since the start of the Duterte administration from 7.1% in the third quarter of 2016 to 5.6% in the first quarter of 2019. There was a momentary increase to 7.2% in the third quarter of 2017 but growth fell rapidly after this. IBON also pointed out that the growth was slowing even before the budget impasse and election ban on infrastructure spending.

Africa added that the economic managers are being deceitful in claiming that the 5.1% unemployment rate in April 2019 is the lowest unemployment in four decades. He pointed out that the DOF is well aware that the change in the official definition of unemployment in 2005 drastically reduced the reported unemployment rate and number of unemployed which makes the April 2019 figure incomparable with the 25 years of data before 2005.

On the contrary, IBON said, computing according to the original definition of unemployment for comparability would show that the real unemployment rate in 2018 is 10.1% and the real number of unemployed is 4.6 million. These are much worse than the already high 9.0% unemployment rate and 4 million unemployed in 2016, again computed according to the original definition. In contrast, officially released figures for 2018 were a grossly underreported 5.3% and 2.3 million, respectively.

The high unemployment is a direct result of how only an annual average of 81,000 new jobs have been created since the start of the Duterte administration, from 41 million employed in 2016 to 41.2 million in 2018. This is the worst job generation in the post-Marcos period.

Poverty statistics meanwhile show seemingly less poor Filipinos only because of government’s very low poverty threshold, said Africa. The government’s Php69.50 daily per capita poverty threshold and only Php48.60 subsistence or food threshold in the first semester of 2018 are absurdly low and not conceivably enough to meet decent minimum standards for food, shelter, transportation, health care, and education, stressed Africa. He said that this leads to a gross underestimation of the real number of poor Filipinos.

Finally, Africa clarified that it is very deceitful to claim that TRAIN benefited 99% of taxpayers. The Duterte administration wants to make it appear that 99% of Filipinos benefited from TRAIN but the truth is that only 5.5 million personal income taxpayers with tax cuts out of 23 million Filipino families gain from TRAIN. The poorest 17.2 million or eight out of 10 Filipino families will pay TRAIN’s higher consumption taxes but without any personal income tax gains to offset these. The government is trying to distract the public from how a disproportionate part of TRAIN revenues come from the poorest majority of Filipinos due to additional levies on consumption goods including petroleum products and sugar-sweetened beverages, said Africa.

IBON warned the public to be more discerning about the government claims and not to take these at face value. Yet the country can only start to take steps to real solutions when there is more candor and honesty, rather than self-serving propaganda, about the real problems the economy and the people face. #